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L161— H41 


RAILROADS 


Their  Relations  to  the  Public. 


Should  they  be  owned  by  the  State? 

Owned  by  Individuals,  should  their  Earn- 
ings be  fixed  by  the  State  ? 


Between  a  Farmer,  a  Government  Official  and  a 
Railroad  Superintendent. 


IFOK,    S^LE    OIT    THE    O^iaS. 

(P(BIGE  10  GE^ITTS. 


CHICAGO: 
J.  J.  Spalding  &  Co..  Pri.vters,  Binders  and  Stationers,  158  Clark  Stre 

1875. 


"•flii***" 


SI'S 


INTRODUCTORY. 


In  presenting  this -plain  and  short  discussion  to  the  public,  it  is  just 
to  say  that  it  does  not  pretend  to  be  an  exhaustive  investigation  of  the 
subject  of  which  it  treats.  A  volume  as  large  as  "The  Wealth  of  Nations" 
might  be  written,  and  then  only  a  portion  of  the  ground  covered  con- 
cerning railroads  and  their  relations  to  modern  civilization.  This 
pamphlet  is  designed  to  suggest  thinking  upon  these  vast  problems, 
rather  than  to  demonstrate  the  method  of  their  true  solution. 

The  idea  of  presenting  it  in  a  colloquial  form  was  suggested  to 
me  by  conversations  which  I  have  overheard  and  sometimes  taken  part 
in,  at  various  times  within  the  past  few  months ;  and  as  the  theme  is 
one  not  only  interesting  to  all  thinking  persons,  but  of  vast  importance 
to  every  one,  I  have  ventured  to  try  my  unaccustomed  hand.  I  have 
endeavored  to  present  the  different  questions  from  the  stand-point  of 
both  the  consumer  and  the  producer — whose  interests  are,  in  a  certain 
concrete  sense,  always  antagonistic.  That  is  to  say,  the  consumer 
always  wants  low  prices  and  the  producer  high  prices. 

In  my  judgment,  railroads  are  as  much  subject  to  the  laws  of  trade 
as  other  commercial  enterprises  or  industries.  Others  than  myself  must 
determine  whether  in  this  colloquy  that  idea  has  been  elucidated. 

Men  of  position  and  influence  have  taken  the  other  side  and 
declared  railroads  exempt  from  the  law  of  competition.  And  this 
opinion  begot  the  recent  Granger  (so-called)  legislation  in  the  West, 
even  though  the  opinion  was  not  formulated  and  directly  avowed.  Of 
the  entire  honesty  of  most  men  holding  that  doctrine,  among  Grangers 
and  others,  I  have  no  doubt -^  nor  have  I  any  doubt  as  to  the  error  of 

LIBRARY 

UNIVERSIP'       ILUNOIS 

UK.      I 


iv  Introductory. 

the  doctrine  and  the  manifold  evils  to  whirh  it  leads.  However,  I  do 
not  expect  to  work  a  revolution  in  public  opinion,  and  if  what  I  have 
here  put  down  —  most  of  which  is  from  bona  fide  talks  —  suggests  theo- 
ries which  have  not  before  been  thought  of,  or  is,  at  last,  the  means  of 
formulating  just  views  which  shall  finally  predominate  in  arranging  har- 
moniously the  relations  between  the  people  and  the  railroads,  or  brings 
out,  through  criticism,  or  otherwise,  any  new  thought  or  additional 
valuable  light,  I  shall  be  quite  contented.  The  subject  is  vast  enough 
and  vital  enough  to  merit  serious  and  sober  investigation,  and  its  mag- 
nitude keeps  pace  with  the  development  of  the  country.  With  those 
who  think  about  such  things,  and  who  are  willing  to  try  to  fairly  solve 
them,  I  leave  it  to  determine  whether  I  am  right  or  wrong  in  the  views 
herein  advanced- 

THE   AUTHOR. 


A  Colloquy  between  a  Farmer,  a  Government  Offi- 
cial and  a  Railroad  Superintendent. 


Government  Official.  Railroads  should  be  managed  exclusively  by 
the  General  Government. 

Farmer.  That  is  my  view  about  it ;  that  would  put  up  the  bars 
and  shut  out  the  extortion  which  you  railroaders  practice. 

Railroad  Superintendent.  How  would  governmental  control  better 
railway  affairs  in  their  relation  to  the  public  ? 

Govt.  Official.  Why,  passenger  tariffs  and  freight  rates  would  be 
made  equal  all  over  the  country,  and  the  people  would  no  longer  be  at 
the  mercy  of  soulless  corporations. 

Farmer.  And  we  should  be  able  to  put  our  products  into  the  mar- 
ket without  paying  the  high  rates  railroads  now  extort. 

R.  R.  Supt.  I  do  not  agree  with  you ;  I  do  not  believe  you  would 
get  your  products  to  market  as  cheaply  as  you  do  now ;  and  do  you  not 
know  that  in  a  governmenc  like  this,  where  oflficers  are  changed,  for 
political  reasons,  every  time  the  General  Administration  changes,  there 
would  be  some  stealing.?  And  think  of  the  enormous  patronage  which 
the  supreme  control  of  all  railroads  and  all  railroad  employes,  in  the 
United  States  would  bestow  upon  a  President  —  a  position  already  too 
abundantly  endowed  with  power  of  this  sort.  Suppose  Gen.  Grant, 
just  at  this  moment,  had  all  the  railroad  appointments  of  the  Union ; 
there  are  over  six  hundred  thousand  men  in  railway  employment  in  the 
United  States,  and  most  of  them  vote.  But  upon  the  broader  grounds 
that  the  business  of  governments  is  merely  the  protection  of  the  life, 
liberty  and  property  of  the  citizens,  and  that  they  cannot  legitimately 
carry  on  railroading  or  any  other  business,  I  object  to  all  your  theories 
which  make  the  government  a  parent,  and  the  citizen  an  infant  whom 
it  must  nurse  and  cherish. 


6  A   Colloquy.     Railroads 

Govt.  Official.  Well,  then,  upon  your  standing-ground  it  is  impossi- 
ble for  you  to  advocate  subsidies  by  the  state  and  county  to  aid  in  the 
building  of  railroads. 

R.  R.  Supt.  True.  The  duty  of  government  is  merely  to  protect 
the  citizen  in  liberty,  property  and  life.  For  this  service,  and  this  alone, 
the  citizen  may  be  made  to  pay  a  tax.  All  other  taxes,  including  those 
for  paying  interest  upon  municipal,  state,  and  riational  bonds,  which 
have  been  given  to  aid  companies  or  individuals  to  construct  railroads, 
are  at  best  of  doubtful  expediency  and  vicious  in  their  tendency.  You 
know,  however,  that  the  development  of  the  West  would  have  been 
postponed,  perhaps,  half  a  century  except  for  aid  to  railroads. 

GoT>t.  Official.  There  would  be  no  more  stealing  if  government  ran 
the  railroads  than  there  is  now,  and  government  would  not  expect  a 
profit  of  more  than  four  or  five  per  cent. 

R.  R.  Supt.  I  doubt  about  the  stealing.  There  are  dishonest  men 
in  railroads,  of  course,  but  on  the  other  hand  it  is  safer  to  trust  to  the 
individual  owners  of  railroads  to  look  after  their  officials  than  to  leave 
that  vigilance  to  Congress,  the  heads  of  Departments,  or  the  President. 
This  one  reason  is  enough,  in  my  judgment,  to  deter  us  from  giving 
government  the  control  of  the  railroads.  But  if  you  differ  from  me, 
and  still  think  it  would  be  better  to  place  the  politicians  of  the  country 
in  control  of  its  railroads,  I  say  that  upon  economic  grounds  there  are 
insuperable  objections  to  this  course. 

Farmer.  Why,  you  don't  mean  to  say  that  we  should  not  have 
lower  fares  and  rates  if  government  controlled  the  railroads? 

R.  R.  Supt.  I  do  mean  to  say  that,  in  my  opinion,  you  would  not 
have  lower  rates,  but  if  you  did  it  would  be  made  up  by  taxation  ;  you 
would  desire  the  government  to  earn  enough  on  the  roads  to  pay  the 
cost  >f  operating  and  keeping  them  in  repair,  and  at  least  five  per  cent, 
on  their  cost.  And  by  the  governmental  purchase  of  the  railroads  you 
would  add  to  the  National  Debt  over  $3,000,000,000,  and  the  interest 
upon  that  at  five  per  cent,  would  amount  to  $150,000,000  a  year,  which 
would  have  to  be  earned  by  the  roads  over  and  above  all  operating  ex- 
penses. If  it  were  not  earned  then  you  and  I  and  all  the  people  would 
have  to  be  taxed  in  some  way  to  make  it  up.  Now  this  is  about  what 
the  railroads  of  this  country  earn  at  this  time.  They  earned  in  1872-3, 
5.2  per  cent.,  according  to  the  best  statistics. 

Farmer.  If  your  railroads  are  so  generally  impecunious,  how  can 
they  afford,  as  most  of  them  do,  to  furnish  elegant  and  costly  cars  for 


and  their  Relations  to  the  Public.  Y 

the  private  use,  with  locomotive  and  train-men  attached,  of  their  prin- 
cipal men  and  managers?  Why  cannot  they  be  economical,  and  save 
money  for  their  employers  and  stockholders  by  traveling  in  the  ordinary 
passenger  cars  ? 

R.  R.  Supt.  Well,  there  is  money  frequently  wasted  by  operating 
special  trains  which  ought  to  be  saved.  There  is  no  excuse  for  many  of 
them,  and  they  only  demonstrate  the  misuse  of  capital  in  railroads 
by  incompetent  and  vain  men,  who  value  personal  comfort  and  per- 
sonal notoriety  higher  than  the  interests  of  the  men  whose  property 
they  mismanage.  There  is,  however,  a  necessity  for  a  plain,  comfort- 
able business  car  for  the  use  of  the  general  officers  —  an  office,  merely, 
on  wheels  —  in  which  business  may  be  transacted  while  passing  on 
inspection  tours  from  station  to  station.  Such  a  car,  run  as  a  "special" 
by  the  General  Superintendent  or  President,  on  purely  business  trips, 
is  an  economical  adjunct  of  a  well-managed  railroad,  and  saves  both 
time  and  money  by  its  judicious  use. 

Govt.  Official.  Well,  then,  if  they  earned  over  five  per  cent.,  that  is 
all  —  you  say  yourself — that  would  be  necessary  under  Government, 
and  we  should  have  saved  two-tenths  of  one  per  cent,  on  $3,000,000,000, 
which  would  aggregate  six  millions  of  dollars. 

R.  R.  Supt.  Yes.  But  I  contend  that  they  would  not  have  earned 
five  per  cent,  in  1872-3,  nor  anything  like  it,  if  they  had  been  run  by  the 
government.  The  5.2  percent,  earned  in  1872-3  was  the  average — some 
roads  earned  more  and  some  roads  earned  less  than  five  per  cent.,  and 
some  earned  nothing  at  all  over  expenses.  Now,  under  government  con- 
trol, those  which  earned  more  than  the  average  would  probably  have  been 
made  to  earn  less  than  they  did,  and  those  which  earned  less  than  the 
average  would  certainly  not  have  been  made  to  earn  more,  and  the  people 
living  in  pi-osperous  regions  of  the  Union  which,  with  good  crops,  are  able 
to  support  railroads,  would  have  had  to  pay  for  the  maintenance  of  the 
lines  of  road  in  the  unprosperous  and  crop-losing  sections  of  the  coun- 
try where  operating  expenses  eat  up  the  receipts  of  the  roads. 

Farmer.  Well,  I  live  in  Illinois,  and  I'd  prefer  that  what  I  pay 
over  and  above  a  fair  rate  should  go  to  help  people  in  Arkansas  and 
Florida  than  into  the  pockets  of  millionaires. 

R.  R.  Supt.     Why  .? 

Farmer.  Because  they  deserve  and  need  it,  and  poor  people  should 
get  it  instead  of  rich  ones. 


8  A   Colloquy.     Railroads 

R.  R.  Supt.  There,  my  friend,  is  where  you  are  mistaken.  The 
money  invested  in  railroads  in  America  is,  frequently,  the  money  of 
poor  people, — not  day-laborers,  but  ministers  of  the  gospel,  teachers, 
widows  and  minors,  and  others  in  moderate  circumstances,  who  have 
laid  up  something  for  a  rainy  day. 

'Govt.  Official.     Yes,  that  is 'pretty  true;  but  the  capitalists  have  a 
good  deal  in  railroads  also. 

R.  R.  Supt.  Very  true;  but  poor  people  are  in  the  same  boat  with 
them,  and  people  just  as  deserving  too  of  the  sympathy  of  my  friend, 
the  farmer  here,  as  are  the  people  either  of  Arkansas  or  Florida.  But 
there  is  another  thing  to  consider.  If  the  politicians  managed  the  rail- 
roads and  government  owned  them,  the  tendency  would  constantly  be 
to  building  new  lines  into  sparsely  settled  regions  where  no  roads  can 
pay  for  years  to  come.  And  the  farmer  in  Illinois,  Iowa  and  Wiscon- 
sin would  then  be  taxed  to  support  such  roads.  If  railroads  were 
owned  by  government,  why  would  not  every  town  or  post-ofifice  in  the 
land  be  entitled  to  a  railroad —  why  should  government  discriminate.' 
Whenever  any  district  of  country  imagined  that  it  needed  a  railroad  it 
would  at  once  —  instead  of  investing  its  own  capital  or  securing  the 
investment  of  capital  by  others  in  the  enterprise  —  proceed  to  elect 
members  of  Congress  favorable  to  the  scheme,  and  in  a  short  time  Con- 
gress would  become  a  mob  of  railroad  subsidy  advocates,  trading  votes 
with  each  other  and  heroically  bleeding  the  national  treasury  to  build 
unnecessary  lines  of  road  and  make  unnecessary  positions  of  pay  to  be 
filled  by  political  paupers. 

Govt.  Official.  There  is  a  point  which  you  evade.  In  1872-3,  you 
assert  that  the  railroads  of  the  country  earned  an  average  of  5.2  per 
cent.  Now,  what  was  this  on  ;  their  actual  cash  cost,  or  their  cost  as  it 
is  represented  by  bonds  which  were  sold  at  an  enormous  discount,  and 
stock  which  has  been  largely  watered  ? 

R.  R.  Supt.  It  was  on  the  cost  as  represented  by  the  bonds  and 
stock  of  the  roads.  It  is  true  that  the  bonds,  more  or  less  of  them, 
perhaps  a  large  portion,  were  sold  below  par,  because  the  enterprises 
were  hazardous,  and  that  the  stocks  have  occasionally  been  watered. 
That  is  to  say,  taken  as  a  whole,  the  bonds  and  stock  represent  the 
actual  cost  of  the  roads  plus  a  margin  for  the  risk  taken  in  building 
them.  In  some  instances  this  risk  was  over-estimated,  and  the  invest- 
ors made  money,  but  in  more  instances  it  was  under-estimated,  and  the 
investors  lost  money  heavily. 


and  their  Relations  to  the  Public.  9 

Govt.  Official.  Well,  then,  if  the  government  had  built  the  roads,  it 
would  not  have  required  this  margin  for  risk,  but  would  have  built  at 
actual  cash  cost. 

R.  R.  Supl.  As  the  government  would  not  have  constructed  rail- 
roads as  commercial  enterprises,  it  would  not  have  required  this  margin 
for  risk,  but,  in  my  judgment,  it  would  have  exhausted  a  much  wider 
margin  in  extravagance  and  jobbery,  and  it  would  have  built  many 
more  good-for-nothing  roads.  Who. ever  saw  government  work  carried 
on  economically.'  Point  out  a  river  and  harbor  improvement  or  a 
government  building  which  has  been  completed  substantially  well  at 
moderate  cost  .'* 

Govt.  Official.  Yes  ;  but  when  business  increases,  as  it  has  over  the 
New  York  Central  for  example,  so  as  to  enable  that  road  to  earn  per- 
haps 15  or  20  per  cent,  on  its  original  cash  cost,  the  owners  of  the  road 
do  not  reduce  the  rates,  but  they  say  the  property  has  increased  in 
value,  and  immediately  proceed  to  issue  stock  to  represent  the  increase 
and  thereby  keep  their  dividends  down  to  seven  or  eight  per  cent.  That 
stock  is  not  issued  as  a  margin  for  risk  of  construction. 

R.  R.  Supt.  Admit  that  to  be  precisely  as  you  state  it,  and  what  of 
it.'  If  the  property  is  worth  the  face  of  the  stock  and  bonds,  then 
there  is  no  water  in  New  York  Central.  Is  there  any  legal  or  moral 
reason  why  the  man  who  owns  a  railroad  shall  not  pocket  the  increase 
in  value,  just  as  a  real  estate  owner  in  New  York  City,  a  cheese  maker, 
an  iron  manufacturer,  a  wool  grower,  a  wheat  raiser,  a  corn  grower  and 
pork  manufacturer  may  pocket  the  increased  value  of  their  property.' 
Shall  Commodore  Vanderbilt  be  made  to  surrender  his  increasement  of 
values  to  the  general  public,  and  the  Astors  be  permitted  to  hold  their 
millions  of  increasement  in  real  estate  values,  and  Moses  Taylor  to 
enjoy  his  hundreds  of  thousands  from  iron  mills .'  Should  property 
and  profits  in  railroads  be  assorted  out  from  all  other  property  and 
profits  and  governed  by  special  law .' 

Govt.  Official.  Certainly  not ;  I  do  not  pretend  to  say  that  men  who 
own  railroads  have  no  right  to  all  the  increase  in  value,  and  what  you 
have  just  uttered  is  an  argument  on  my  side.  If  the  government 
owned  the  roads,  the  people  would  get  the  benefit  of  the  increase  in 
value,  in  reduced  rates. 

R.  R.  Supt.  Perhaps  so  ;  and  the  same  is  true  of  real  estate,  and 
iron  mills  and  all  other  property.  If  the  government  retained  the  title 
to  all  lands,  the  public  would  get  the  benefit  of  all  the  increase  in  its 


10  A  Colloquy.     Raibvads 

value  ;  and  if  the  government  owned  all  the  iron  and  cotton  mills,  the 
public  would  get  the  benefits  of  any  profits,  just  as  it  would  if  govern- 
ment owned  the  railroads. 

Govt.  Official.  That  is  absurd.  The  government  could  not,  of 
course,  carry  on  every  branch  of  industry. 

R.  R.  Supt.     Why  not .? 

Govt.  Official.  Because  the  machinery  would  be  too  complicated  and 
cumbersome  for  Congress  and  the  Executive  to  handle,  and  too  power- 
ful for  the  people  to  trust  in  the  hands  of  a  few  men. 

R.  R.  Supt.  Exactly.  Those  are  good  reasons,  and  there  are 
others  all  so  patent  that  no  man  needs  an  argument  to  enable  him  to 
apply  them.  And  I  say  the  same  reasons  fit  railroads.  Put  them  into 
the  hands  of  Congress  and  the  President  and  you  have  bestowed  a  mul- 
titude of  duties  and  powers  so  complex  and  so  potent,  that,  under  our 
form  of  government  even,  unjust  discriminations  and  partisan  extortions 
and  prejudices  in  the  management  would  breed  revolution. 

Govt.  Official.  Well,  I  don't  agree  with  you.  I  think  the  govern- 
ment could  run  the  railroads  as  —  for  example  —  it  runs  the  post-office 
department. 

R.  R.  Supt.  Government  does  not  carry  the  mails  any  more  than 
express  companies  carry  expressed  merchandise ;  railroads  transport 
both.  But  the  mail  service  is  nothing  compared  to  seventy  thousand 
miles  of  railroads  and  their  management,  as  you  well  know;  and 
even  the  mail  service  fails  to  pay  its  way  under  governmental  con- 
trol. And,  moreover,  if  government  had  control  of  the  railroad  sys- 
tems of  the  country,  as  I  previously  remarked,  every  hamlet  post-office 
would  demand  a  railroad,  and  congressmen  would  be  elected  solely  on 
the  railroad  question,  and  the  country  would  be  full  of  small,  unpaying 
short  lines ;  a  deficit  would  result  every  year  in  the  railroad  department 
as  much  larger  than  the  present  annual  deficit  in  the  post-office  depart- 
ment, as  the  railroad  interests  of  the  United  States  are  larger  than  the 
post-office  department  and  its  mud-wagon  lines  of  stages.  Besides,  the 
inequalities  of  transportation,  concerning  which  complaints  have  been 
so  often  made,  exist  in  the  letter-carrying  of  the  United  States  in  a 
wonderfully  developed  perfection.  What  would  you  think  of  a  railroad 
which  should  charge  as  much  for  hauling  a  hundred  pounds  of  freight 
from  Chicago  to  Aurora  as  to  Omaha,  to  Calumet  as  to  Kalamazoo  1 
And  yet  letters  to  Calumet  cost  three  cents,  and  they  cost  no  more  to 


and  their  Relations  to  the  Public.  11 

San  Francisco.  Commercially  no  such  inequality  as  this  can  be  right 
or  rightfully  exist.  But  for  educational  reasons  it  may  be  permitted, 
though  I  doubt  its  soundness. 

G(rvt.  Official.  Well,  I  should  like  to  see  governmental  management 
of  railroads  thoroughly  tried  in  the  United  States. 

R.  R.  Supt.  That  is  to  say,  you  believe  that  the  government 
could  own  and  run  the  railroads  cheaper  on  the  whole  than  they  are 
now  run,  and  I  believe  it  would  cost  more  to  then  run  them  honestly 
than  it  costs  now.  And  I  furthermore  believe  the  stealing  would 
be  sublime.  The  peculations  of  the  Whiskey  and  Indian  Rings 
would  become  microscopic  in  comparison  with  the  magnificent 
plunderings  of  the  government's  railroad  ring.  Who  ever  saw  any 
government  work  executed  economically .'  The  railroad  patronage 
alone  of  the  President  of  the  United  States,  under  your  proposed  man- 
agement, could  make  him  Dictator.  And  this  whole  question  resolves 
itself  into  a  very  pertinent  conundrum,  which  is  merely  this :  i.  e., 
''  Would  it  be  wise  and  prudent  to  put  the  railroads  into  the  hands  ot 
the  politicians .''" 

You  have  possibly  heard  of  the  trip  made  in  Pennsylvania  by  Judge 
Hoar,  of  Massachusetts,  at  a  time  when  the  Keystone  State  owned  and 
operated  the  railroads  within  her  limits.  The  train  upon  which  that 
eminent  New  England  jurist  was  traveling  came  suddenly  to  a  halt,  at 
a  small  station,  and  seemed  to  have  permanently  located  there,  when, 
upon  inquiry  by  the  Judge,  who  imagined  some  break  in  the  machinery, 
it  was  ascertained  that  the  delay  was  because  the  conductor,  brakemen, 
engineer  and  greaser  were  attending  a  cross-roads  caucus,  by  order  of 
the  political  superintendent  of  the  road. 

I  do  not  and  cannot  think  the  American  people  are  yet  ready  for  any 
such  measure,  or  capable  of  so  grave  an  error.  And  while  I  doubt 
whether,  under  any  form  of  government,  railroads  should  be  owned 
and  operated  by  the  sovereign  power,  I  am  very  clearly  decided  that 
under  a  republican,  elective  government  it  would  not  work  at  all. 

Farmer.  Probably  it  will  not  be  best  in  our  government  to  have 
the  railroads  owned  by  it ;  for,  as  you  say,  stealing  would  be  great,  and 
inefficient  management  expensive,  while  the  patronage  might  be  dan- 
gerous. But  why  should  not  the  government  force  railroads  to  charge 
only  reasonable  rates .'' 

R.  R.  Supt.     What  are  reasonable  rates  .^ 

Farmer.  Why,  rates  which  pay  a  fair  return  on  the  investment,  say 
ten  per  cent. 


12  A  Colloquy.     Railroads 

R.  R.  Supt.  No.  Reasonable  rates  for  transportation  are  all  you 
can  get,  just  as  a  reasonable  price  for  wheat  is  all  you  can  get.  But 
your  rule  would  not  help  you  any,  because,  as  I  have  already  shown, 
railroad  stockholders  in  this  country  now  receive  less  than  six  per  cent., 
taken  as  a  whole.  One  objection  to  limiting  the  profits  of  railroads  is, 
that  it  would  prevent  private  parties  from  building  them,  and  all  attempts 
to  limit  the  profits  of  roads  already  constructed,  whether  by  legislation 
or  otherwise,  are  efforts  at  robbery. 

Govt.  Official.  But  it  will  not  deter  the  investment  of  private  capi- 
tal if  the  limitation  is  ten  per  cent.  It  did  not  prevent  such  invest- 
ments in  Massachusetts,  and  will  not  in  the  West. 

R.  R.  Supt.  Massachusetts  was  an  old  and  thickly  peopled  State 
before  the  railroads  were  even  dreamed  about.  The  toil  and  accumu- 
lations of  seven  or  eight  generations  of  hard-working,  gainsome  and 
economical  Yankees  had  made  Massachusetts  rich  in  gold  and  silver. 
And,  therefore,  even  with  the  ten  per  cent,  limitation  in  an  aged  and 
wealthy  country  like  New  England,  railroads  may  be,  possibly  have 
been,  built.  The  chances  for  loss  were  small,  and  the  probability  of 
ten  per  cent  great.  Had  there  been  a  possibility  of  twenty  per  cent., 
Massachusetts  would  certainly  have  been  richer  in  transportation  facili- 
ties than  she  is  to-day,  and  the  Boston  &  Albany  would  have  had  a 
rival  years  ago. 

Govt.  Official.  Well,  you  admit  that  roads  have  been  built  in  Massa- 
chusetts with  the  lo-per-cent.  limit. 

R.  R.  Supt.  Yes,  they  have  been  built  because  in  Massachusetts 
there  was  a  surplus  capital  seeking  investment  at  home  •  and  because 
capital,  always  timid,  wants  to  stay  as  near  home  as  it  can,  and  in  so 
densely  populated  a  state  the  chances  for  ten  per  cent,  were  good.  These 
two  causes  combined  built  the  Massachusetts  railroads  in  spite  of  the 
law !  But  they  have  not  been  strong  enough  to  build  a  rival  to  the 
Boston  &  Albany,  because  the  chance  of  making  ten  per  cent,  in  that 
case  is  not  so  good.  A  man  will  buy  a  mine  of  precious  metal,  and  take 
the  chance  of  failure  in  its  development,  because  there  is  one  possibility 
out  of  a  hundred  that  he  may  make  a  hundred  or  a  thousand  per  cent. 
But  if  the  profits  on  mining  were  limited  to  ten  per  cent.,  very  few  indi- 
viduals, in  the  face  of  all  the  risks,  would  undertake  it.  Now,  the  same 
holds  good  as  to  all  railroads  in  a  new  country,  remote  from  the  owners 
of  capital ;  and  also  holds  good  as  to  all  new  roads,  in  an  old  country,  which 
are  wanted  as  rivals  to  established  lines.  In  each  case,  hazard  is  increas- 
ed, and  with  it  the  chance  of  gain  to  the  investor  must  also  increase,  or  no 


and  their  Relations  to  the  Public.  13 

investment  will  be  made.  No  rival  to  the  Boston  &:  Albany  has  been 
built,  and,  in  my  judgment,  none  will  be  built  so  long  as  the  law  fixes  a 
limit  of  lo  per  cent,  to  its  earnings,  without  limit  as  to  losses.  If  there 
had  been  no  limit  on  the  Boston  &  Albany  road,  it  would  have  had 
stronger  motives  than  it  has  had  to  stimulate  its  traffic  to  a  point  where 
it  could  earn  more  than  lo  per  cent.  And  the  fact  that  it  could  earn 
more  would  have  had  a  tendency  to  build  a  rival  line,  if  such  rival  line 
was  not  limited  as  to  its  profits.  The  lo-per-cent.  limit  in  Massachusetts 
is  a  relic  of  barbarism  on  a  par  with  usury  laws,  which  all  intelligent 
people  (especially  those  of  Massachusetts)  now  admit  are  wrong  in 
theory.  I  may  say  here  that  the  present  law  of  that  State  assumes  the 
right  to  make  rates  for  railroads  absolutely,  without  any  agreement  on 
the  part  of  the  State  that  the  roads  may  have  ten  or  any  other  per  cent. 

Faryner.  When  railroads  are  once  constructed  they  cannot  be 
taken  up  and  carried  off";  and  as  they  cost  a  great  deal  of  money,  peo- 
ple do  not  build  them  without  fair  prospects  of  remuneration,  as  you 
truly  say,  and  consequently  there  is  not  much  competition.  And  for 
this  reason  railroads  charge  pretty  much  what  they  please,  while  iron 
makers  and  real  estate  owners,  in  fact  all  branches  of  business,  are  kept 
within  bounds  by  competition. 

R.  R.  Supt.  If  railroads  as  a  general  thing  can  charge  what  they 
please,  you  must  give  them  credit  for  being  very  considerate  and  mod- 
erate, since  in  1872-3  they  only  earned  an  average  of  5.2  per  cent,  on 
their  cost  and  were  paying  seven  and  eight  per  cent,  on  borrowed 
money.  The  stockholders  really  got  less  than  five  per  cent.,  and  in 
many  cases  got  nothing  at  all.  Since  1873,  hundreds  of  roads  have 
gone  into  bankruptcy  and  are  now  in  process  of  being  sold  out  to  sat- 
isfy creditors.  If  stockholders  could  have  charged  what  they  wanted 
to  for  transportation,  why  should  they  have  allowed  the  advent  of  such 
disasters  to  their  property  1  They  certainly,  under  the  Granger  theory 
of  the  potency  of  railway  corporations,  could  have  charged  enough  to 
have  paid  the  interest  on  their  cost  as  represented  by  their  first  mort- 
gage bonds. 

Govt.  Official.  They  built  too  many  roads  for  the  country  to  sup- 
port.    There  was  not  business  enough  for  all  the  roads. 

R.  R.  Supt.  But  they  could  have  raised  the  rates,  according  to  my 
friend  here,  and  charging  what  they  pleased,  when  business  was  light 
they  should  have  raised  rates. 

Govt.  Official.  I  presume  they  did  charge  all  the  business  would 
endure.     A  bushel  of  wheat  is  worth  only  so  much  in  New  York  or 


14  A  Colloquy.     Railroads 

Liverpool,  and  it  costs  so  much  to  raise  it  in  Iowa,  and  if  the  roads 
charged  more  than  the  difference  the  farmer  had  better  burn  than 
ship  it. 

R.  R.  Supt.  Then  it  appears  to  be  not  entirely  true  that  railroads 
may  charge  whatsoever  rates  they  please  ? 

Farmer.     Of  course,  they  can't  charge  more  than  an  article  will  bear. 

R.  R.  Supt.  Tell  me  why  it  is  that  railroads  cannot  charge  just  what 
they  please ;  why  is  it  that  they  do  not  charge  more  than  the  freight 
will  bear.? 

Farmer.  Because,  if  they  did,  they  would  not  get  the  freight,  and 
would  lose  money. 

R.  R.  Supt.  Very  well,  then,  self-interest  has  something  to  do  with 
the  rates  charged  by  railroads .? 

Farmer.  Yes,  of  course,  the  interests  of  a  railroad  are  to  make 
rates  which  will  stimulate  rather  than  destroy  shipments. 

R.  R.  Supt.  Precisely.  Now  are  rates  which  stimulate  business 
such  rates  as  are  best  for  the  community  at  large  or  not  7 

Farmer.     Certainly,  such  rates  are  what  we  all  want. 

R.  R.  Supt.  What  would  be  the  effect  in  business  affairs  generally 
if  railroads  should  reduce  rates  below  the  point  necessary  to  stimulate 
trade  ? 

Farmer.     I  presume  it  would  be  still  better  for  the  rest  of  us. 

R.  R.  Supt.     But  suppose  it  did  not  pay  the  railroads  } 

Farmer.     That  would  not  matter  to  me  or  my  neighbors. 

R.  R.  Supt.  Not  directly,  perhaps,  but  in  the  end  it  would  matter 
to  you  and  your  neighbors,  in  this  way  :  The  roads  ceasing  to  pay 
would  not  be  kept  up  in  good  order.  The  iron  and  rolling  stock  would 
wear  put  and  not  be  replaced  ;  accidents  would  become  frequent;  the 
roads  would  not  have  cars  to  do  their  business  in  an  efficient  manner. 
And  what  farmers  fare  best  and  thrive  most — those  who  live  on  the  line  of 
a  well-to-do,  thrifty  railroad,  or  those  who  reside  upon  a  broken-down  one.-* 
Hundreds  of  roads  in  America,  and  especially  in  the  Western  and  Souths 


and  their  Relations  to  the  Public.  16 

em  States  have  been  stewing  through  bankruptcy  since  1873.  They 
have  put  rates  too  low,  and  have  let  the  roads  run  down,  and  finally  go 
to  the  wall. 

Farmer.     Why  have  they  done  this  ? 

R.  a.  Supt.  Because  of  the  competition  which  you  said  did  not 
exist. 

Govt.  Official.  He  did  not  mean  that  when  two  roads  cross  or  come 
together,  or  where  they  are  very  near  one  another,  there  is  not  competi- 
tion ;  of  course,  under  those  conditions,  competition  always  exists. 
But  take  it  at  points  which  have  only  one  road,  with  no  other  within 
many  miles.     There  is  certainly  no  competition  at  such  points. 

R.  R.  Supt.  You  are  mistaken.  Is  there  competition  between 
the  iron  mines  of  Missouri  and  Michigan.?  Is  there  competition  be- 
tween the  cheap  lands  of  Nebraska  and  those  of  Minnesota  and  Texas.' 
Put  yourself  in  the  place  of  a  railroad  owner.  Suppose  you  owned  a  road 
in  Iowa  and  I  owned  one  in  Missouri,  and  there  are  a  hundred  miles 
between  your  road  and  my  road.  Would  you  let  me  make  rates  so  low 
as  to  attract  settlements  along  my  line,  or  enhance  lands  along  my  line, 
without  doing  the  same  thing  with  your  road  1  Would  you  adhere  to 
excessively  high  rates,  while  I  kept  moderately  low  ones,  any  more  than 
the  land  owners  along  your  line  would  keep  prices  on  their  real  estate 
so  high  as  to  drive  buyers  to  my  line .''  Would  not,  on  the  other  hand, 
self-interest  prompt  you  to  make  your  road  and  the  country  tributary  to 
it  as  attractive  as  possible  1  In  other  words,  is  it  not  for  the  interest  of 
every  railroad  to  so  adjust  its  rates  as  to  stimulate  business  .''  It  certainly 
is  ;  and  can  the  public  and  its  prosperity  need  rates  which  do  more  than 
this .? 

Again,  it  is  not  necessary  that  the  two  roads  should  strike  a  common 
point  to  make  even  that  kind  of  competition  which  you  say  does  exist 
at  such  a  point.  To  illustrate  what  I  mean,  let  me  show  you  on 
the  map  before  us,  the  lines  of  the  Chicago  &  Rock  Island  and  the 
Chicago,  Burlington  &  Quincy  roads  in  Iowa.  You  will  observe  that 
these  two  roads  run  nearly  parallel  with  each  other  across  the  State  of 
Iowa.  They  are  from  twenty-five  to  fifty  miles  apart,  say.  Now,  half 
way  between  the  two  lines,  the  country  is  well  settled  with  prosperous 
farmers.  These  farmers  and  the  country  store-keepers  with  whom  they 
trade  can  do  their  business  with  either  one  of  these  lines  of  road. 
Take  now  the  towns  of  Atlantic  on  the  Rock  Island  road,  and  Red  Oak 
Junction  on  the  Burlington  line.     Are  not  the  merchants  of  both  of 


16  A  Colloquy.    Railroads 

those  towns  striving  for  the  business  of  this  intermediate  country,  which 
may  go  in  Either  direction  ? 

Farmer.     Undoubtedly  they  are. 

H.  R.  Supt.  Very  well,  then,  suppose  the  Burlington  road  should 
reduce  its  rates  on  lumber,  for  example,  so  that  the  merchants  of  Red 
Oak  could  undersell  the  merchants  of  Atlantic,  what  would  be  the 
result  ? 

Farmer.     The  Rock  Island  would  probably  reduce  its  rates,  also. 

R.  R.  Supt.  Weil,  now,  that  verj-  process  is  going  on  all  the  time. 
Roads  which  are  miles  apart  are  competing  for  this  intermediate  busi- 
ness, and  the  prices  at  which  they  are  willing  to  do  it  fix  the  rates  on  all 
that  traflSc  which  is  so  near  to  one  line  that  it  could  not  afford  to  haul 
to  the  other. 

Farmer.  How  do  the  rates  at  which  the  roads  are  willing  to  do  this 
intermediate  business  affect  the  rates  on  business  so  near  to  them  that 
there  is  no  quarreling  about  it } 

R.  R.  Supt.  How  can  the  railroad  discriminate .'  Take  the  point 
of  Atlantic  on  the  Rock  Island  road.  Rates  are  made  to  the  merchants 
and  grain  buyers  of  Atlantic-— not  to  individual  farmers  living  between 
there  and  Red  Oak.  How  can  the  Rock  Island  road  make  one  rate  on 
such  portion  of  a  merchant's  goods  as  he  sells  to  a  farmer  li\ang  half 
way  between  the  two  roads,  and  another  rate  on  such  portion  of  his 
goods  as  he  sells  to  customers  nearer  home  }  It  is,  of  course,  impractic- 
able, and  rates  to  Atlantic  cannot  be  higher  than  those  at  which  the 
Rock  Island  road  is  willing  to  do  that  part  of  the  business  for  which 
Atlantic  is  in  competition  with  Red  Oak. 

Govt.  Official.  I  guess  you  are  right  about  that ;  but,  it  is  easy  gen- 
erally for  two  persons  to  agree,  and,  no  doubt,  the  two  railroads  you 
speak  of  agree  as  to  what  the  rates  to  Red  Oak  and  Atlantic  shall  be. 

R.  R.  Supt.  Of  course,  they  might  agree ;  but  particularly,  they 
do  not  If  they  did,  they  never  would  agree  to  put  rates  higher  than 
the  people  could  pay  and  be  as  well  off  as  any  other  section  of  the 
country.  Railroads  can  agree  on  rates  at  points  where  they  come  in 
actual  contact.  I  was  only  trying  to  show  you  that  it  was  not  necessary 
for  two  roads  to  come  in  contact  with  each  other  to  make  the  same 
kind  of  competition  that  exists  at  points  where  they  do  come  together. 


and  their  Relations  to  the  PuhHc.  iT 

Farmer.  That  sounds  very  well,  but  how  is  it  that  at  points  where 
railroads  come  together,  they  frequently  carry  freights  and  passengers 
at  less  rates  than  they  charge  to  and  from  localities  on  their  respective 
lines  where  the  distance  is  much  shorter? 

R.  R.  Supt.  Well,  now,  let  me  explain  that  to  you.  Suppose  you 
had  a  railroad  between  Detroit  and  Chicago,  and  nobody  else  had  a 
road  between  those  points,  and  I  owned  a  road  from  Toledo  to  St.  Louis. 
Then,  the  rates  all  along  the  line  of  your  road,  that  is,  your  local  rates, 
and  your  rates  to  and  from  Chicago  would  affect  my  local  rates  and  my 
rates  to  and  from  St.  Louis.  We  could  neither  of  us  ignore  the  other. 
Each  would  be  interested  in  making  his  line  as  attractive  as  the  other 
for  all  kinds  of  business.  If  you  pursued  a  wise  and  liberal  policy,  and 
I  a  mean  and  narrow  one,  you  would  develop  your  transportation,  and  add 
something  to  your  profits  annually,  while  on  my  line  business  would 
not  pay  and  the  road  would  not  prosper.  If,  on  the  other  hand,  I  also 
adopted  a  wise  policy  we  should  both  do  equally  well,  if  the  natural 
advantages  of  our  lines  were  equal.  Under  these  conditions,  a  healthy 
competition  would  exist  between  our  roads. 

Govt.  Official.  Yes,  but  suppose  you  chose  to  pursue  a  mean  and 
narrow  policy — then  this  healthy  competition,  as  you  call  it,  would  not 
help  anybody  living  on  the  line  of  your  road. 

R.  R.  Supt.  Of  course,  that  is  true,  but  I  should  undoubtedly  do 
what  it  was  my  interest  to  do,  and  it  would  not  be  for  my  interest  to  dis- 
courage business  on  my  road. 

Govt.  Official.  Yes,  but  you  might  do  it.  People  on  your  line  would 
be  at  your  mercy.  -» 

R.  R.  Supt.  Practically,  what  you  say  amounts  to  nothing.  No 
railroad  ever  did  or  ever  will  persistently  pursue  such  a  policy  if  let 
alone.  And  if  one  or  two  out  of  the  hundreds  of  railroads  in  the  Union 
did  or  should  pursue  such  a  course,  it  would  not  justify  governmental 
interference.  The  people  would  cease  to  patronize  those  lines,  or  others 
would  be  built,  and  the  probability  of  such  a  condition  of  blind  man- 
agement is  not  worth  considering. 

Govt.  Official.  I  cannot  agree  with  you.  The  Boston  &  Albany 
road  is  to-day  an  illustration  of  just  such  a  state  of  things.  It  has  a 
monopoly  of  the  New  England  business,  and  it  keeps  rates  so  high  that 
Boston  cannot  compete  with  New  York  for  foreign  trade. 


18  A  Colloquy.    Railroads 

R.  R.  Supt.  What  you  say  of  the  Boston  &  Albany  is  measurably 
true,  and  yet  neither  Boston  nor  the  towns  along  the  B.  &  A.  line  seem 
to  go  into  decay.  But  one  principal  reason  why  the  laws  of  competition 
do  not  have  full  force  in  the  case  of  the  Boston  and  Albany  railroad  is, 
that  Massachusetts  legislators  have  seen  fit  to  interfere  with  those  laws, 
and  virtually  to  enact  that  the  B.  &  A.  road  shall  never  pay  its  stockholders 
over  ten  per  cent,  per  year.  Consequently  that  road  has  no  great  motive 
to  stimulate  trade  beyond  the  point  necessary  to  pay  ten  per  cent.,  and 
no  rival  corporation  has  been  formed  to  divide  the  business  with  the  B. 
&  A.,  because  a  limit  of  ten  per  cent,  profit,  with  the  full  possibilities  of 
loss,  are  no  attraction.  So  Massachusetts,  as  a  State,  has  expended 
millions  of  dollars  to  build  up  a  rival  to  the  B.  &  A.  by  the  way  of  the 
Hoosac  tunnel ;  whereas,  if  that  State  had  let  the  laws  of  competition 
and  self-interest  have  unrestricted  play,  and  left  railroads  to  earn  what 
they  could,  private  capital  would  probably  have  accomplished  all  that  the 
Hoosac  tunnel  can  do,  and  at  much  less  cost  to  the  public.  I  am,  in 
describing  the  lines  between  Detroit  and  Chicago,  and  Toledo  and  St. 
Louis,  supposing  that  the  natural  laws  of  competition  are  let  alone. 

Govt.  Official.  Well,  go  ahead.  You  have  not  answered  the  ques- 
tion :  "  How  is  it  that  railroads  carry  freight  to  and  from  points  which 
are  called  competing  points,  at  lower  than  local  rates .?" 

R.  R.  Supt.  Well,  then,  I  own  the  Toledo  and  St.  Louis,  and  you 
the  Detroit  and  Chicago  line,  and  we  will  suppose  you  are  charging  a 
little  more  per  hundred  pounds  between  your  termini,  i.  e.,  Detroit 
and  Chicago,  than  you  are  asking  between  either  of  those  cities  and 
intermediate  points,  because  the  distance  is  greater — you  are  not  charg- 
ing/r^;  rata  per  mile ;  because,  as  you  know,  //  costs  you  less  per  mile  for 
a  long  haul  than  for  a  short  one — terminal  and  general  expenses  being 
as  great  in  the  one  case  as  the  other.  Suppose  your  proportion  of  a 
rate  from  Chicago  to  New  York,  ina  Detroit,  is  20  cents  per  hundred 
pounds,  and  the  through  rate  is  60  cents  per  hundred  pounds ;  and  up 
to  this  time  Chicago  has  no  other  route  eastward,  and  the  rates  you 
have  established  are  stimulating  business  and  paying  you  a  fair  profit. 
Now,  I  build  a  branch  from  my  Toledo  and  St.  Louis  road  into  Chicago, 
and  I  find  that  you  have  all  the  business  there,  and  that  people  are  in 
no  hurry  to  come  to  my  road  at  the  same  rates  which  you  are  charging. 
Therefore  I  reduce  rates  to  New  York  to  45  cents  a  hundred.  This 
is  15  cents  below  your  rate,  and  I  begin  at  once  to  get  business  ;  I  may 
make  very  little  profit  on  it,  but  a  little  is  better  than  none.  Now,  what 
will  you  do  under  these  circumstances :  remain  quiet  and  let  me  take  all 
the  business,  or  endeavor,  by  reducing  your  own  to  an  equality  with  my 


and  their  Relations  to  the  Public.  19 

rates,  to  retain  at  least  half  of  it,  even  at  a  small  profit  ?  Clearly, 
even  if  you  can  make  half  a  cent  on  the  hundred  pounds,  at  the  45  cent 
rate,  it  is  better  for  you  to  take  it  than  to  get  nothing.  So  you  obey  the 
laws  of  competition  and  self-interest,  and  reduce  your  through  rate. 
But  if  you  were  at  the  same  time  to  reduce  all  your  local  rates  in  the 
same  proportion,  your  road  would  soon  be  running  down  and  going  into 
bankruptcy. 

Farmer.  Well,  now,  if  the  government  owned  the  roads,  and  one 
road  could  do  the  business  out  of  Chicago,  it  would  not  build  the  branch 
from  your  road  into  Chicago. 

R.  R.  Supt.  Probably  not.  But  then  Chicago  rates  would  remain 
as  they  were,  say  at  60  cents  to  New  York ;  and  how  would  the  people, 
in  that  case,  be  any  better  off  than  if  you  and  I  owned  the  roads .'' 

Govt.  Official.  I  will  tell  you  how.  If  you  built  your  branch  into 
Chicago  and  cut  the  rate  to  45  cents,  and  forced  the  other  road  down 
in  its  rate,  you  would  both,  very  likely,  increase  your  local  rates  to  make 
it  up ;  at  least  you  would  not  reduce  them  as  much  as  you  might  be  able 
to  if  the  Chicago  business  to  New  York  remained  at  the  60  cent  rate. 

R.  R.  Supt.  Can  I  ignore  the  law  of  supply  and  demand .''  My 
local  rates  would  always  have  been  put  as  high  as  the  business  would 
bear,  and  I  could  not  increase  them  if  I  would. 

Farmer.     What  are  "  terminal  expenses  .?  " 

R.  R.  Supt.  By  terminal  expenses,  I  mean  switching  cars  at  stations, 
loss  of  use  of  cars,  loading  and  unloading  cars,  etc.,  etc.  And  because 
there  are  no  terminal  expenses  attendant  upon  taking  up  passengers  at 
local  stations,  is  the  reason  why  those  passengers  can  ride  generally 
at  the  same  rate  per  mile  which  is  paid  by  those  from  the  terminal 
points  on  the  same  road.  The  loading  and  unloading  passengers  at 
way  stations,  costs  us  nothing ;  we  neither  lose  the  use  of  cars,  nor  pay 
switchmen,  nor  stevedores,  in  their  behalf.  But  as  to  freight,  there  are 
the  same  terminal  expenses  on  local  as  on  through  business. 

Farmer.  How  do  you  make  local  rates .''  What  animates  your 
action  in  their  manufacture .-' 

R.  R.  Supt.  We  make  the  prices  of  local  passenger  and  freight 
hauling  in  such  a  manner  as  to  bring  the  most  gains — just  as  you  make 
the  price  of  pork.     We  want  to  haul  men  and  things  and  make  money ; 


20  -^  Colloquy.     Railroads 

you  wish  to  sell  pork  and  wheat  and  make  money.  We  do  not  ask  such 
prices  that  no  one  will  travel  or  ship  over  our  rails,  and  you  do  not  demand 
such  prices  that  no  one  will  purchase  wheat  and  pork.  We  demand  all 
we  can  safely  ask,  and  stimulate  travel  and  shipments,  and  you,  with 
your  farm  products,  exact  the  last  farthing  which  can  be  wrung  from 
the  public,  and  at  the  same  time  facilitate  your  exchanges.  The  rail- 
road, an  aggregation  of  men  and  money,  is  governed  by  the  same 
motives  which  govern  farmers  and  their  money.  There  is,  however,  no 
limit  to  the  reduction  of  rates ;  and  rates,  while  they  never  can  be  un- 
fairly high  and  stimulate  trade,  may  be  and  often  are  unfairly  low. 

Govt.  Official.     What  do  you  mean  by  fair  rates  .? 

R.  R.  Supt.  1  mean  rates  which  will  stimulate  business  and  pay  the 
railroad  as  much  as  possible.  Our  friend,  the  farmer,  calls  a  fair  rate 
for  wheat  all  that  he  can  get ;  that  is,  all  the  public  will  pay  and  facili- 
tate the  exchange  between  them  and  him.  His  wheat  has  a  specific 
purchasing  power  ;  it  will  purchase  money  of  all  who  want  wheat,  and 
he  trades  it  for  money,  which  has  a  general  purchasing  power,  and  will 
buy  anything  which  is  for  sale.  The  farmer  calls  that  price  a  fair  price 
which  is  the  biggest  the  market  wilt  permit  him  to  get,  and  a  fair  freight 
or  passenger  rate  is  the  biggest  one  railroads  can  command,  and  not 
paralyze  transportation. 

Govt.  Official.  Well,  you  just  said  rates  were  often  made  unfairly 
low,  what  do  you  mean  by  that }  How  is  it  possible  on  your  theory  of 
what  a  fair  rate  is  ? 

R.  R.  Supt.  Railroad  rates  are  more  often  unfairly  low  than  the 
prices  of  other  things  because  of  the  nature  of  the  business — the  neces- 
sity of  intrusting  its  management  to  a  vast  number  of  irresponsible 
agents  who  are  not  owners,  and  who,  in  their  anxiety  to  get  business, 
frequently  go  lower  than  the  laws  of  trade  require. 

Farmer.  There  is  much  in  what  you  say  that  I  had  not  before 
thought  of.  Nevertheless,  in  my  judgment,  government  may  and  should 
limit  the  earnings  or  profits  of  railroads  to  a  certain  fixed  per  ceni.,  even 
without  owning  them. 

R.  R.  Supt.  But  I  have  already  shown  you  in  the  case  of  the  Bos- 
ton &  Albany  road,  which  is  limited  by  Massachusetts  legislation  to  a 
ten  per  cent,  profit,  that  such  enacted  limitation  crushes  out  all  motives 
for  placing  the  earning  facilities  of  that  line  beyond  the  point  of  pro- 
ducing the  ten  per  cent.,  however  much  more  it  might  be  made  capable  of 


and  their  Relations  to  the  Public.  £1 

earning:  ist.  Because  it  cannot,  lawfully,  divide  any  greater  profits; 
and,  2d.  Because  it  feels  confident  with  such  a  law  in  force,  no  strong 
rival  will  enter  the  field — the  possible  profit  being  limited,  and  the  pos- 
sible loss  being  unlimited. 

In  other  words,  a  law  limiting  earnings  kills  competition.  Thus : 
The  tendency  of  any  one  engaged  in  commerce,  including  the  owner  of 
a  railroad,  is  to  do  all  he  can  with  his  capital.  Now  railroads,  unlike 
merchants,  have  always  fixed  capital  in  track  and  structures  which  they 
cannot  move.  Nattirally,  and  if  let  alone,  the  tendency  of  railroads  is 
to  stimulate  trade  to  the  utmost,  so  long  as  it  pays  them  to  do  it.  If,  now, 
you  come  with  your  law  and  say  that  after  a  road  has  earned  10  per 
cent,  on  its  cost,  it  shall  no  longer  pay  it  to  stimulate  traffic,  what  is  the 
result  ?  You  kill  the  great  motive  power  of  all  trade,  /.  <?.,  self-interest, 
after  reaching  a  certain  point,  be  it  jio  or  5  per  cent. 

Govt.  Official.  There  are  other  methods  of  holding  roads  to  reason- 
able rates ;  why  not  fix  their  prices  by  statute,  and  then  let  them  earn 
what  they  can  according  to  law  ? 

R.  R.  Supt.  Do  you  mean  that  you  would  have  the  State  make  in- 
flexible and  perpetual  rates } 

Goi^'t.  Official.  Certainly  not ;  but  I  would  have  a  Board  of  Com- 
missioners appointed  by  authority  of  the  commonwealth,  who  should 
establish  tariffs  on  freight,  and  fares  for  passengers  once  a  year,  or 
oftener,  if  deemed  advisable.  , 

R.  R.  Supt.  How  would  our  friend,  the  farmer,  like  to  have  a  Board 
of  State  Commissioners  to  fix  the  price  of  wheat  and  other  agricultural 
productions }  No  man  will  invest  money  in  property  which  he  cannot 
lawfully  manage  and  control ;  and  no  corporation  will  build  or  buy  a 
railroad  for  a  State  legislature  to  manage.  In  short,  the  very  idea  of 
property  of  ownership  conveys  also  the  idea  of  the  right  to  use,  the 
right  to  manage  and  control. 

Govt.'  Official.  That  is  an  altogether  different  affair;  the  price  of 
wheat  and  commodities  generally  will  take  care  of  itself. 

R.  R.  Supt.  How  }  Sometimes  it  is  very  high  and  sometimes  it  is 
very  low.     How  does  it  take  care  of  itsplf .? 

Farmer.  Why,  the  law  of  supply  and  demand  regulates  the  price ; 
but  that  law  does  not  operate  in  the  case  of  railroads.     If,  for  example, 


22  A  Colloquy.     Railroads 

I  demand  more  for  my  wheat  than  the  market  price,  that  is,  more  than 
some  other  persons  having  wheat  to  sell  ask,  I  cannot  sell  it.  But  if  the 
Boston  &  Albany  railroad  wishes  to  charge  more  for  transporting  a 
bushel  of  wheat  one  hundred  miles  to  a  local  station,  than  some  other 
road  demands  for  similar  distances,  it  can  get  it.  The  people  residing 
at  that  station  cannot  move  away,  and  they  cannot  avoid  shipping  on 
that  road,  and  they  must  pay  the  price  exacted. 

R.  R.  Supt.  Well,  I  had  supposed  that  branch  of  this  transportation 
topic  exhausted.  However,  I  maintain  that  railroads  are  just  as  much 
subject  to  the  law  of  supply  and  demand  as  any  other  business.  All 
over  the  Union,  in  villages  and  hamlets,  there  are  isolated  country 
stores,  blacksmith  shops,  grist  mills  and  saw  mills  ;  now  what  regulates 
their  charges .'' 

Farmer.     Competition ! 

R.  R.  Supt.  What  competition  }  Few  towns  in  the  West  have  more 
than  one  saw  mill,  and  many  neighborhoods  have  only  one  store.  What 
prevents  extortion  on  the  part  of  millers  and  merchants  so  located  .' 
Their  customers,  in  many  cases,  would  be  obliged  to  trade  with  them 
just  as  much  as  people  on  the  line  of  the  Boston  &  Albany  railroad 
would  be  forced  to  ship  their  wheat  over  its  rails,  in  the  case  you 
instanced. 

Farmer.  If  the  miller  or  storekeeper  takes  advantage  of  his  isolated 
position,  and  the  power  it  gives  him,  he  will  drive  away  trade.  We 
might  suffer  his  exactions  for  a  short  time,  but  we  should  soon  either 
trade  elsewhere  or  get  another  miller  and  storekeeper  to  establish 
among  us. 

R.  R.  Supt.  Possibly  a  law  prescribing  ten  per  cent,  profits  as  the 
limit  for  capital  in  mills  and  merchandise,  in  any  county  or  neighbor- 
hood, would  meet  your  approval  and  save  the  community  from  extortion, 
though  it  would  certainly  never  induce  new  mills,  nor  new  stores,  any 
more  than  the  Massachusetts  law  has  begotten  rivals  to  the  Boston  & 
Albany  road.  But  if  the  Boston  &  Albany  road  should  take  the  power 
it  has,  and  extort  money  from  the  people  along  its  line,  would  there  not 
be  another  road,  or  would  not  the  population  at  last  leave  the  line  }  They 
might  have  to  submit  for  a  little  time,  and  in  the  case  of  a  railroad,  pos- 
sibly for  quite  a  length  of  time — longer  than  in  the  case  of  the  miller  or 
storekeeper — but  finally  any  attempt  on  the  part  of  a  railroad  corporation 
to  extort  money  from  its  patrons  would  be  more  disastrous  to  the  road 
than  a  similar  attempt  on  the  part  of  merchant  or  miller  would  be.    Be- 


and  their  Relations  to  the  Public.  23 

cause  a  railroad  is  a  fixture  and  cannot  be  moved  away,  even  if  it  has 
killed  its  traffic  by  extortion.  Therefore,  the  laws  of  self-interest,  and 
of  competition,  and  of  supply  and  demand,  do  operate  upon,  and  must 
always  govern,  inflexibly,  the  rates  charged  by  railroads  for  transporta- 
tion, and  the  earnings  of  capital  in  railroads,  just  as  they  govern  the 
price  of  iron,  wheat  or  cotton. 

Govt.  Official.  The  leading  authority  on  the  railroad  question  in  the 
United  States  is  absolutely  against  you  on  this  point. 

,  R.  R.  Supt.  To  whom  do  you  refer.?  Who  is  the  leading  authority  on 
this  topic  which  has  so  vexed  the  souls  of  Grangers,  legislators  and 
owners  of  railroads  .'' 

Govt.  Official.  I  refer  to  the  Railroad  Commissioners  of  the  State  of 
Massachusetts,  Messrs.  Charles  Francis,  Adams,  jr.,  A.  D.  Briggs,  and 
F.  M.  Johnson,  and,  by  your  permission,  I  will  read  to  you  what  they 
say  in  their  fifth  yearly  report,  page  48,  as  follows  :  "  It  may  now  be 
"  taken  as  very  generally  conceded  that  railroads  are,  and  from  the  very 
"  nature  of  things,  must  always  remain  practical  monopolies — that  the 
"  operation  of  the  law  of  competition  as  affecting  supply  and  demand, 
"can  exercise  a  very  limited  control  over  them,  and  that  even  this 
"  limited  control  is  rather  of  a  disturbing  than  of  an  equalizing  charac- 
"  ter.  The  supply  of  competing  railroads  is  not  and  cannot  be  indefin- 
"  ite  ;  nor  does  the  increase  in  their  number  tend  to  diminish  the  cost 
"  of  transportation ;  nor,  when  unprofitable  in  one  place,  can  they  be 
"moved  to  another;  nor  can  any  excess  of  capital  invested  in  them  be 
"  released  at  will  and  otherwise  used  ;  nor  can  they  be  made  to  feel 
"the  influence  of  competition  equally  at  all  points  which  they  serve. 
"  Competition  is,  however,  made  up  of  these  very  elements  here  want- 
"  ing  ;  it  is  their  presence  which  supplies  its  effective,  regulating  force 
"  to  the  operation  of  the  natural  laws  of  supply  and  demand.  The 
"  popular  mind  has  been  slow  to  realize  that  they  were  here  wanting  ; 
"  but  once  the  obvious  fact  conceded,  it  follows  that  all  the  dealings  of 
"  railroads  with  communities  must  either  be  unregulated,  except  by  the 
"  intermittent  action  of  a  disturbing  force,  or  else  they  must  be  carried 
"  on  under  a  greater  or  less  degree  of  governmental  interference.  Very 
"  naturally,  therefore,  the  character  and  degree  of  this  governmental 
"  interference  are  most  actively  discussed  in  those  countries  which 
"  originally  organized  their  railroad  systems  upon  the  assumption  that 
"  no  such  interference  was  necessary.  Of  these  countries,  America  was 
"  that  one  which  carried  its  reliance  upon  economical  laws  the  furthest. 
"  It  is  in  America,  consequently,  that  the  work  of  readjustment  is 
"accompanied  with  the  greatest  amount  of  difficulty." 


24  A  Colloquy.     Railroads 

R.  R.  Supt.  I  have  read  that  before ;  but  it  is  not  the  truth,  as  I 
think  I  have  already  shown  you.  The  point  made,  that  increasing  the 
number  of  railroads  does  not  lessen  the  cost  of  transportation,  may  be 
applied  to  iron  mills,  which,  however  numerous  they  may  become,  can- 
not, by  mere  numbers,  decrease  the  cost  of  making  iron. .  Nor  can 
capital  invested  in  unprofitable  cotton  mills  or  hotels  be  released  at 
pleasure,  and  yet  no  one  pretends  that  the  iron  furnaces  of  Ohio  and 
Pennsylvania  and  the  hotels  of  Newport  and  Saratoga  are  not  in  com- 
petition. The  Railroad  Commissioners  of  Massachusetts,  judging 
them  by  what  you  have  just  read,  take  a  very  narrow  view  of  what 
competition  is.  I  say  that  competition  is  the  desire  of  et'ery  man  to 
do  the  very  best  he  can  for  himself;  and  a  railroad,  as  I  have  shown 
you,  cannot  do  the  very  best  for  itself  except  by  making  its  charges  such 
as  will  stimulate,  and  not  depress  business  over  its  rails.  The  Rail- 
road Commissioners  of  Massachusetts  are  respectable  gentlemen,  and 
Mr.  Adams  has  at  least  given  much  time  and  study  to  these  questions. 
And  Mr.  Adams  is  a  hard-money  man  and  a  free-trader;  he  denounces 
all  sorts  of  paternalism  in  government,  and  all  restrictive  laws  upon 
commerce,  except  in  the  case  of  railroads,  and  here  it  is  impossible  to 
believe  that  his  faith  in  governmental  interference  and  regulatory  legis- 
lation is  very  strong,  because  it  is  so  at  variance  with  the  remainder  of 
his  political  economy.  Yet  Mr.  Adams  suggests  partial  control  by  the 
government  of  all  railroads,  and  cites  the  experience  of  Belgium — a 
pocket  nation,  so  small  in  geographical  extent  that  it  might  be  dropped 
into  an  Illinois,  Iowa,  or  Nebraska  prairie  and  absolutely  lost.  But  Mr. 
Adams  fails  to  show  us  how  governmental  railroading  would  operate  in 
a  country  so  vast  as  ours,  and  one,  too,  whose  productive  interests  are 
so  diverse,  and  at  times  adverse,  and  he  certainly  fails  to  demonstrate 
that  the  law  of  competition  becomes  inoperative  upon  railroads;  that 
is  to  say,  the  law  of  trade,  of  self-interest.  And  he  might  show  now, 
that  even  in  little  Belgium,  there  is  great  opposition  to  governmental 
railroad  management,  for  not  many  months  since  "  the  Industrial  and 
Maritime  Society,  of  Antwerp,"  addressed  to  the  Belgium  House  of 
Representatives  a  petition  upon  this  subject,  in  which  the  following 
passage  occurs,  among  others  equally  peppery  :  "  Have  we  not  seen 
"  the  administration  forcing  shippers  to  accept  a  declaration  of  irre- 
"  sponsibility  so  as  to  escape  its  obligations  ?  Such  a  system  can  be 
tolerated  no  longer!"  That  is  the  esteem  in  which  governmental  rail- 
roading is  now  held,  even  in  little  Belgium !  And  Mr.  Adams  is  not 
very  clear  in  what  you  read  from  him  just  now.  Perspicuity  of  style 
is  not  a  distinguishing  characteristic  in  the  passage  you  have  quoted. 
No  one  can  read  it,  or  hear  it,  casually,  and  get  any  definite  idea  of 
what  Mr.  Adams  desires  to  expound   or  explain.      He   remarks  that 


and  their  Relations  to  the  Public.  26 

railroads  cannot  be  "  made  to  feel  the  influence  of  competition  equally 
at  all  points  which  they  serve!"  This  astounding  platitude  would  be 
no  flatter,  paraphrased  to  read  "  railroads  cannot  be  made  to  feel, 
equally,  a  competition  which  is  of  unequal  vigor  at  different  points 
which  they,  serve  ;"  or,  "  railroads  are  influenced  less  by  a  little  compe- 
tition at  one  point  which  they  serve,  than  they  are  by  a  big  competition 
at  a  point  where  competition  cannot  influence  them  at  all."  He  says: 
"Competition  is,  however,  made  up  of  these  very  elements."  Now, 
read  Adams  again,  and  tell  me  what  "  elements  "  he  refers  to,  or  what 
he  defines  "  competition"  to  mean  .''  Railroads  are  oftener  ruined  and 
bankrupted  by  competition  than  any  other  class  of  business.  They  are 
more  sensitive  to  the  laws  of  trade — that  is,  the  laws  of  self-interest — 
than  many  other  branches  of  industry,  because  if  they  once  kill  the 
goose  that  lays  their  golden  egg,  if  they  drive  away  traffic  by  charging 
too  much,  they  cannot  get  it  back  again,  and  it  is  impossible  for  them 
to  seek  new  fields,  as  a  merchant  might,  after  driving  away  his  business 
by  a  similar  course. 

Farmer.  Well,  if  the  laws  of  competition  do  operate  on  railroads, 
why  is  it  that  rates  are  so  high  } 

R.  R.  Supt.  They  are  not  high — the  earnings  verify  that.  All  the 
statistics  in  Poore's  Railroad  Manual  prove  by  earnings  that  rates  are 
too  low.  But  if  they  were  high,  it  would  be  for  the  same  reason  that  in 
1871  iron  and  wheat  were  high.  People  can  no  more  get  along  without 
iron  and  wheat  than  without  railroads,  and  yet  when  wheat  is  worth  a 
dollar  a  bushel  in  Iowa,  you  do  not  claim  the  high  price  as  a  sequence 
of  the  inoperativeness  of  the  law  of  competition  among  grain-growers 
in  lowa^ 

Farmer.  Well,  when  our  wheat  in  Iowa  is  worth  a  dollar  a  bushel, 
it  may  because  bad  weather  in  the  Spring,  loss  of  first  sowing,  or  drouth 
or  rains  may  have  enhanced  the  expenses  of  producing  wheat,  so  that 
we  may  make  less  profits  at  a  dollar  than  we  have  realized  in  former 
years  at  seventy-five  cents.  But  railroads  can  carry  for  the  same  price 
one  year  as  another. 

R.  R.  Supt.  What  you  say  may  be  true.  But  what  does  cost  of 
production  have  to  do  with  market  price .'  Do  you  not  ask  all  you  can 
get  at  all  times  for  all  your  products.?  Because  you  happen,  by  a  favor- 
able season,  to  harvest  and  garner  ten  bushels  of  wheat  where  you  only 
hoped  or  expected  to  get  five  bushels  of  wheat,  do  you  reduce  the  price 
of  your  wheat? 


26  A  Colloquy.    Railroads 

Farmer.     What  does  it  cost  to  haul  a  ton  of  freight  a  mile  ? 

R.  R.  Supt.  What  does  it  cost  to  produce  a  bushel  of  wheat,  or 
raise  a  three-year-old  steer?  The  cost  of  operating  railroads,  as  well  as 
their  original  cost  per  mile,  varies  as  much  at  times  and  in  different  sec- 
tions of  the  Union,  as  the  cost,  through  soil  changes  or  climatic  vicissi- 
tudes, of  producing  a  bushel  of  grain  varies.  Because  a  mile  of  railway- 
through  a  tunnel,  cut  out  of  a  mountain  of  granite,  costs  as  much  as 
twenty-five  ordinary  miles  of  railroad,  is  no  reason  why  the  company 
owning  it  should  charge  twenty-five  times  as  much  for  carrying  a  ton  of 
freight  over  that  mile  through  the  tunnel. 

Moreover,  there  is  another  difference  between  the  money  in  mer- 
chandising and  farming  as  compared  with  the  money  in  railroading. 
The  former  is  circulating  capital ;  it  makes  returns  by  transfers  or 
exchanges  of  itself.  The  owners  of  it  may  convert  it  any  day  into 
something  else. 

The  money  in  railroads  is  fixed  capital ;  it  cannot  be  transferred 
from  the  railroad  to  something  else  at  will,  nor  can  the  road  itself  be 
taken  up  and  moved  to  a  better  paying  locality ;  and  the  only  method 
of  obtaining  profits  from  this  fixed  capital  is  by  its  retention  and  use. 
This  fact  makes  fixed  capital  more  vigilant  as  to  rivals,  and  more  sensi- 
tive as  to  competition,  than  ever  circulating  capital  becomes.  Fixed 
capital,  irrevocably  merged  into  iron  rails,  machinery,  and  roadbed  and 
depots,  etc.,  etc.,  is  chained  to  a  locality.  But  circulating  capital  in 
merchandise,  farms,  or  farm  products,  when  business  lags,  may  be 
transferred.  Fixed  capital  is  timid  because  it  knows  it  must  make 
profits  where  it  is,  or  be  consumed  in  the  effort ;  while  circulating  cap- 
ital may  be  bold  and  even  aggressive,  knowing  that  the  world  is  open 
for  its  ventures.  When  competition  reaches  the  first,  it  must  submit  to 
its  decrees.  When  competition  becomes  uncomfortable  to  the  latter,  it 
moves  away,  to  seek  new  fields. 

Govt  Official.  Well  admit,  as  you  assert,  that  competition  does 
operate  on  railroads,  yet  so  tardily  is  the  influence  felt  that  in  the  end 
there  is  not  much  practical  result  therefrom. 

R.  R.  Supt.  In  one  manner  competition  may  operate  slowly  on 
railroads ;  /.  e.,  if  a  road  oppresses  you,  you  cannot  get  another  road  as 
easily  as  you  would  change  your  grocer  or  miller,  if  for  their  commodi- 
ties they  charged  you  more  than  some  other  grocer  or  miller  would 
charge  you.  If  you  reside  in  a  city,  you  can  go  from  one  store  to 
another  and  take  advantage  of  the  lowest  prices.  But  if  you  live  in 
the  country,  and  have  but  one  store  or  one  mill  within  miles  of  you, 
and  the   storekeeper   and   miller    oppress    you,    you    cannot  at  once 


and  their  Relations  to  the  Public.  1*1 

change.  But  the  storekeeper  knows  and  the  miller  knows  that  you  will 
change  as  soon  as  possible ;  or,  in  other  words,  that  excessive  charges 
will  depress  trade,  and  that  knowledge  stops  either  of  them  from  extor- 
tion and  oppression.  And  just  so  it  is  with  railroads.  The  owners  of 
them  know  that  rates  which  will  depress  trade  are  against  their  inter- 
ests, the  pickers  of  their  pockets,  and  that  knowledge  keeps  railroad 
owners  straight  and  makes  their  interests  and  the  commercial  prosperity 
of  the  people  along  their  lines  identical  and  inseparable  as  the  Siamese 
Twins — if  one  dies,  the  other  must  perish  also.  There  may  be  isolated 
cases  of  folly  on  the  part  of  the  managers  of  railroads  and  likewise  on 
the  part  of  country  storekeepers  and  rustic  millers.  But  in  the  grand 
aggregate  and  in  succeeding  years  it  is  quite  safe  to  govern  the  mer- 
chant, the  miller  and  the  railroad  by  the  equitable  laws  of  competition 
and  supply  and  demand,  and  the  stronger  law  of  self-interest. 

Govt.  Official.  Why  cannot  and  why  should  not  the  State  regulate 
railroad  fares  as  well  as  it  fixes  the  rates  of  cabmen,  hack-drivers  and 
expressmen  in  the  great  cities  } 

R.  R.  Supt.  In  principle  the  charges  of  hackmen  and  baggage 
expressmen  should  no  more  be  regulated  by  law  than  the  charges  of 
butchers  and  bakers,  but  the  business  of  the  expressman  and  hackman 
is  exceedingly  simple,  and  involves  no  large  and  inseparable  amounts  of 
fixed  capital  as  a  railroad  does.  The  hacks,  horses  and  wagons  can  be 
sold  at  any  time,  separately  or  together.  Knowing  this,  individuals  are 
willing  to  take  their  chances  under  the  municipal  regulations.  And  if, 
after  trial,  they  find  business  unprofitable,  they  sell  out.  And  in  an  avo- 
cation so  uncomplicated  as  hacking  and  wagoning,  any  person  can  get 
up  a  tariff  of  charges.  The  case  of  the  railroad  is  very  different ;  the 
variation  of  a  single  mill  on  the  hundred  pounds,  or  passenger  trans- 
ported a  mile,  would  to  the  baggage-expressman  make  no  loss  or  gain 
worth  noticing.  But  the  variation  of  a  mill  per  hundred  pounds  of 
freight  on  a  railroad  might  involve  the  loss  of  thousands  of  dollars. 
Every  railroad  tariff  is  made  or  should  be  made  so  as  to  put  on  to  each 
sort  of  freight  what  it  can  bear,  and  at  the  same  time  stimulate  ship- 
ments of  that  sort  of  freight,  just  as  the  iron  maker  and  the  farmer  fix 
the  prices  of  their  products.  With  the  old  railroads,  already  in  exist- 
ence, as  I  stated  a  little  while  ago,  to  regulate  by  legislative  enactment 
would  amount  to  robbery. 

Farmer.     Why  .?     I  don't  understand  that. 

R.  R.  Supt.  I  mean  to  say  that  if  I  have  built  a  railroad  in  good 
faith,  expecting  to  use  it,  and  the  government   then  comes  along  and 


28  .4  Cnlloquy.     Railroads 

forces  me  to  accept  rates  which  do  not  pay  me  as  much  as  I  could  make 
out  of  it  if  left  alone,  it  is  taking  my  property  for  your  benefit. 

Gm>t.  Official.  Yes;  but  did  not  government  grant  you  valuable 
privileges,  which  gives  it  a  right  to  a  voice  in  what  you  shall  make  ? 

R.  R.  Supt.     What  privileges  ? 

Govt.  Official.  The  right  of  eminent  domain,  for  one ;  the  right  to 
take  my  house  and  land  for  your  railroad. 

R.  R.  Supt.  True ;  railroads  do  have  the  right  of  eminent  domain 
exercised  for  them,  and  that  is  a  privilege  not  granted  to  natural  per- 
sons.    Are  there  any  others } 

Govt.  Official.  That  is  the  most  important  one,  and  is  not  that 
enough  }  I  cannot  have  it  for  my  hotel,  or  to  enlarge  my  farm  or  my 
store,  no  matter  how  much  I  want  it. 

R.  R.  Supt.  Without  the  exercise  of  that  right  no  railroad  could 
be  constructed,  because  it  cannot  turn  sharp  corners  and  go  round 
every  man's  house,  and  without  this  right  of  eminent  domain,  exercised 
in  behalf  of  railroads,  no  man  would  sell  his  house  at  a  price  railroads 
could  afford  to  pay.  At  all  events,  that  is  the  theory  of  laws  providing 
for  the  condemnation  of  property,  so  as  to  give  the  right  of  way  to  rail- 
roads. Therefore  it  is  not  an  especial  privilege,  but  merely  a  condition 
precedent  of  their  being.  The  public  was  traveling  in  stage-coaches, 
and  wanted  railroads.  It  was  paying  ten  or  fifteen  cents  a  mile,  and  it 
wanted  to  go  in  much  less  time  for  three  or  four  cents  a  mile.  It  could 
induce  people  to  build  railroads  only  by  giving  the  right  to  condemn. 
It  did  so,  and  received  in  consideration  therefor  the  building  of  the 
railroads,  and  all  the  enhanced  facilities  for  transportation  and  travel 
which  they  furnish,  which  has  been  ample  and  complete  consideration. 

Govt.  Official.  I  claim  that  the  exercise  of  the  right  of  eminent  do- 
main in  your  behalf  makes  you  a  common  carrier.  If  I  want  to  build 
a  private  railroad  to  my  own  farm,  I  could  not  exercise  that  right.  You 
are  a  public  carrier,  and  as  such  are  governed  by  the  Ikw  of  common 
carriers. 

R.  R.  Supt.  Of  course  you  are  right  about  that,  and  as  a  common 
carrier  I  am,  no  doubt,  bound  to  treat  all  my  customers  alike,  every- 
thing being  equal.  That  I  admit.  But  the  right  of  eminent  domain, 
which  the  State  has  exercised  for  the  railroads,  does  not  give  the  State 


and  their  Relations  to  the  Publii .  29 

nor  the  public  any  right  to  share  in  the  earnings  of  the  railroads,  either 
directly  or  indirectly. 

Gai't.  Official.  I  agree  with  yo\i  as  to  that.  Your  railroad  is  pri- 
vate property,  but,  having  received  the  benefits  consequent  upon  the 
exercise  for  you,  by  the  State,  of  the  right  of  eminent  domain,  that  pri- 
vate property  has  become  subject  to  public  use  at  rates  which  must  be 
equal  to  all.  And  the  fact  that  railroads  are  close  corporations,  and  that 
the  public  can  find  out  but  little  about  their  internal  management,  makes 
it  necessary  that  the  Legislatures  should  have  power  over  them  to  de- 
mand publication  of  their  expenditures  and  receipts,  and  thus  furnish 
the  knowledge  required  in  order  to  correct  evils. 

R.  R.  Supt.  I  will  not  dispute  the  power  to  send  for  persons  and 
papers  by  any  Legislature  engaged  in  investigating  the  relations  existing 
between  railroads  and  the  public ;  but  I  will  add,  there  is  no  other 
purely  commercial  business  which  has  always  so  freely  published  to  the 
world  all  its  details.  "  Poore's  Railroad  Manual  "  annually  publishes  the 
indebtedness,  and  its  forms,  of  all  railroads  in  the  Union,  with  their 
receipts  and  their  expenses.  What  more  can  you  ask  for  ?  Moreover, 
all  stockholders,  little  ones  as  well  as  big  ones,  have  the  right  to  demand 
and  receive  complete  detailed  statements  of  earnings,  expenditures, 
and  general  management.  And  the  vigilance  of  self-interest  in  stock- 
holders themselves  will  generally  discover  and  correct  abuses.  At  all 
events,  I  would  rather  trust  owners  to  manage  property  than  politicians 
who  do  not  own  it,  and  I  cannot  see  why  publicity  is  required  for  the 
affairs  of  railroads  more  than  for  the  affairs  of  dry  goods  merchants, 
millers,  stock-raisers  and  granges. 

Farmer.  Mr.  Adams,  in  his  late  speech  at  Oshkosh,  expresses  my 
notions.  His  idea  of  publicity  is  elucidated  in  this  way  :  The  bridges 
of  a  main  line  of  Massachusetts  railway  were,  in  the  opinion  of  the  rail- 
road commissioners  of  that  commonwealth,  not  in  proper  condition.  So 
Mr.  Adams  wrote  to  the  President  of  the  road  ;  got  no  answer ;  wrote 
to  the  directors,  and  said  if  they  were  not  heeded  their  next  letter  about 
those  bridges  would  be  addressed  to  the  public  at  large.  This  threat  of 
publicity  brought  the  magnates  of  the  rail  to  time,  and  every  bridge 
was  overhauled  and  repaired  before  the  close  of  the  year.  Publicity's 
influence  did  it. 

R.  R.  Supt.  Of  course.  I  have  read  that,  and  know  all  about  it. 
That  is  well  enough,  perhaps,  but  the  idea  that  men  in  charge  of  Massa- 
chusetts railroads  should  not  know  enough,  or  feel  the  influence  of  self- 
interest  enough  to  mend  their  bridges  unless  told  to  do  so  by  the  rail- 


30  A  Colloquy.    Railroads 

road  commissioners  of  the  State,  and  that  without  their  eyes  to  see,  and 
their  voices  to  warn,  the  bridges  would  have  become  the  slaughter-pens 
of  men  and  property,  which  the  railroad  would  have  the  felicity  of  paying 
for,  does  not  accord  with  my  experience  as  a  railroad  manager.  Publicity 
in  that  light  may  be  an  excellent  thing.  It  ought  to  be  brought  to  bear* 
upon  stove-pipes  and  chimney-flues  in  dwellings,  and  upon  old  ash-barrels 
about  farm-houses.  A  publicity  board  would  be  a  good  thing  for  every- 
body ;  but  if,  instead  of  a  general  board  of  publicity,  you  prefer  one  for 
railroads  alone,  the  railroads  will  never  object  to  it.  On  the  contrary 
every  honest  railroad  official  will  be  delighted  to  have  the  people  inspect 
his  works,  bridges,  tracks,  machinery,  rolling  stock,  and  everything 
else,  and  report  through  their  commissioners  their  exact  condition.  It 
might,  though  a  work  of  supererogation,  furnish  us  much  useful  infor- 
mation gratuitously,  which  would  be  a  check  upon,  or  a  spur  to,  our 
employees.  That,  however,  bears  not  in  the  least  upon  the  commercial 
question,  and  in  nowise  approximates  a  demonstration  of  Mr.  Adams' 
dogma,  that  "railroads  are  not  subject  to  the  laws  of  trade — competi- 
tion and  supply  and  demand." 

There  is  a  wide  difference  between  police  regulation  and  commer- 
cial regulation.  The  first  is  all  right ;  the  latter  is  all  wrong.  Mr. 
Adams,  in  his  remarks  at  Oshkosh,  to  which  you  refer,  talks  a  good  deal 
about  the  laws  of  trade  not  affecting  railroads,  and  then  winds  up,  not 
by  advice  to  remedy  this  alleged  evil,  but  by  advocating  a  system  of 
bridge  inspectors  who  shall  compel  the  railways  to  take  care  of  their 
own  interests  and  the  safety  of  the  public.  The  connection  between 
the  premises  he  lays  down  and  the  bridge  inspection  conclusions  which 
he  deduces  may  exist,  but  if  it  does,  it  is  veiled  in  as  much  mystery  as 
the  source  of  the  Nile. 

Farmer.  But  Mr.  Adams  also  declares  :  "  There  is  the  post-office, 
"  the  supply  of  water  and  of  gas,  in  our  great  cities,  the  telegraph,  and 
"  finally  transportation  by  rail — as  respects  all  these,  a  gradual  expe- 
"  rience  has  taught  us  that  they  are  in  their  nature  matters  of  monopoly 
" — that  to  be  done  economically  they  must  be  done  as  a  whole,  and 
"  that  each  new  competitor,  if  he  does  not  deteriorate  quality,  does 
"  increase  cost.  In  other  words,  the  State  must  sacrifice  its  abstract 
"  principles  and  perform  these  functions  for  itself,  or  it  must  surrender 
"  them  into  private  hands,  and  make  the  best  terms  it  can  for  their  per- 
"  formance  by  others." 

R.  R.  Supt.  Experience  has  taught  us  no  such  thing.  It  is  true 
that  in  most  large  cities  water-works  are  managed  for  the  public  by  the 
public.     But,  as  a  rule,  gas-works  are  owned  and  managed  by  close 


and  their  Relations  to  the  Public.  81 

corporations,  the  city  generally  limiting  the  price  of  gas.  Generally  gas 
companies  have  a  monopoly;  the  field  is  not  open  to  all,  like  the  rail- 
road field.  And  the  post-office  and  water-works  are  run  by  the  public, 
the  first  for  educational  purposes,  and  the  second  for  sanitary  reasons. 
The  cheap  circulation  of  newspapers  and  periodicals  for  the  mental 
health  of  the  people  is  provided  for  by  the  first,  and  education  thereby 
kept  advancing.  And  in  the  great  cities  the  cheap  circulation  of  pure 
water  keeps  the  people  cleanly  and  healthy  bodily,  and  moreover  water 
is  a  natural  product,  like  air,  which  employs  no  army  of  manufacturing 
operatives.  But  with  regard  to  gas  companies.  If  you  will  shut  up  the  rail- 
road field  and  give  one  railroad  a  monopoly,  and  then  limit  the  rates  to 
five  cents  per  mile  for  a  ton  of  freight  or  a  passenger,  all  right.  That  is 
the  way  you  manage  gas  companies.  You  limit  not  the  earnings  (for  they 
generally  earn  from  20  to  50  per  cent.)  but  the  rate,  and  you  put  that 
high  enough  to  make  the  limit  of  no  practical  effect.  If  any  State 
should  undertake  to  limit  the  earnings  of  gas  companies  to  10  per  cent., 
the  largest  cities  within  its  boundaries  might  get  gas-works,  but  the 
smaller  ones  would  not.  Nor  would  the  gas  companies  within  the 
larger  cities  be  disposed  to  make  better  gas  in  order  to  increase  con- 
sumption, after  they  had  reached  a  quality  or  a  point  just  sufficient  to 
declare  the  ten  per  cent,  dividend.  Finally,  gas  companies  and  water- 
works are  very  different  from  railroads.  The  influence  of  a  railroad  is 
felt  for  twenty  or  fifty  miles  on  either  side  of  it.  The  influence  of  a  gas 
main  or  water  pipe  is  measured  by  the  street  or  ward  in  which  it  is  laid. 
The  gas  and  water  field  may  be,  as  Mr.  Adams  remarks,  a  closed  field, 
but  the  railroad  field  is  not  shut  up — it  is  open  to  all. 

Govt.  Official.  Why  is  —  to  change  the  drift  of  this  conversation  a 
little,  and  before  I  forget  to  ask  —  why  is  it  that  in  a  sparsely  settled 
country,  a  long  distance  from  market,  railroads  generally  ask  higher 
rates  than  in  older  and  more  thickly-settled  regions .? 

R.  R.  Supt.  It  is  not  always  true  that  rates  are  higher  in  new 
regions  than  in  old ;  where  it  is  true,  however,  it  is  simply  in  obedience 
to  the  laws  of  trade.  Land  in  new  countries  is  cheap,  and  farmers  can 
afford  to  ship  their  products  at  higher  rates  from  cheap  lands  than  they 
can  from  high-priced  lands.  ' 

Farmer.  Well,  you  have  talked  pretty  strongly  about  competition, 
and  made  out  quite  a  decent  defence  for  your  occupation.  But  you  are 
probably  aware  that  railroads  frequently  "  combine"  to  avoid  competi- 
tion, and  sometimes  even  "  pool"  their  earnings,  so  as  to  do  away  with 
even  the  possibility  of  competition. 


32  A  Colloquy.     Railroads 

Govt.  Official .  And  that  is  one  of  the  dangers  to  which  our  people 
are  constantly  exposed.  Railroads  might  combine  and  put  up  rates  all 
over  the  Union,  and,  as  we  must  ship  commodities  and  must  travel  our- 
selves, we  are  obliged  to  submit  and  pay  tribute  in  compliance  with 
their  exactions.  In  another  decade,  by  combinations,  a  few  men,  like 
Vanderbilt  and  (iould,  may  control  the  whole  transportation  business  of 
America,  and  the  people  be  completely  at  their  mercy. 

R.  a.  Supt.  You  are  wide  of  the  mark  in  saying  that  railroads 
generally  combine  to  keep  rates  up.  No  other  kind  of  property  has 
suffered  so  much  from  warfare  among  its  agents  and  managers. 
Throughout  the  country,  irresponsible  and  unreasoning  Agents  are 
constantly  allowing  caprice,  spite,  personal  ambition,  and  an  insane 
desire  to  haul  freight  for  the  glory  of  quantity  rather  than  a  return  of 
profits,  to  dictate  rates,  to  prescribe  tariffs.  In  this  way  millions  of  dol- 
lars are  annually  lost  to  railroad  owners  by  cutting  rates.  Agents  for 
real  estate,  clerks  in  stores,  salesmen  of  all  kinds,  should  they  pursue  a 
course  which  would  persistently  lose  money  for  their  employers,  or 
jeopardize  the  property  of  their  employers,  would  be  discharged  without 
notice.  Only  the  vast  sums  of  money  buried  in  the  railway  system  of 
the  country  are  thus  recklessly  handled  and  abused.  Gould  and  Van- 
derbilt have  the  brains  to  comprehend  this,  and  they  are  personally 
looking  after  their  agents  in  this  regard.  They  are  men  of  ability,  and 
too  sagacious  to  ever  put  rates  above  a  point  to  stimulate  business  and 
increase  receipts  by  increasing  that  business.  They  are  not  fools. 
They  will  never  kill  the  goose  which  lays  them  golden  eggs.  They 
know  that  the  only  way  for  railroads  to  make  money  is  to  encourage 
industries  of  all  sorts,  stimulate  production,  stimulate  shipments,  and  so 
get  more  business. 

Farmer.  Did  you  not  admit,  in  the  case  of  the  Boston  &  Albany 
road,  that  rates  were  oppressive  and  aggressive  for  want  of  competition? 

R.  R.  Supt.  I  did  not  admit  that;  but  even  if  I  did  I  should 
assign  as  a  reason  for  such  a  condition  of  things  along  that  line,  the  fact 
that  Massachusetts  legislation  deprived  the  Boston  &  Albany  of  all 
motives  for  stimulating  business,  by  the  paternal  provision  of  that 
absurd  statute  which  limits  the  profits  of  capital  in  Massachusetts  rail- 
roads to  ten  per  cent,  per  year.  I  have  been  over  this  ground  already, 
and  I  have  no  hesitation  in  declaring  that  railroads  should  be  entirely 
unrestricted  as  to  rates  and  tariffs.  Left  perfectly  free,  railroads  will 
always  be  found  endeavoring  to  increase  their  business  by  merely  stimu- 
lative charges  which  will  enable  them  to  make  all  they  possibly  can 
and  keep  up  the  volume  of  commerce  over  their  lines. 


and  their  Relations  to  the  Public.  33 

Farmer.      Well,    I   don't    know    about   all    that;    but    what    about 
"  pools  ?"     What  can  you  say  for  or  about  "  pools?" 

R.  R.  Supt.  Well,  "pools"  among  railroads  are  co-operation  applied 
to  capital.  Co-operation  among  laborers  is  popular  and  generally  com- 
mended. Labor  works  for  wages  ;  capital  for  profits.  If  the  former 
may  justly  combine  to  keep  wages  up  to  a  living  point,  the  latter  cer- 
tainly has  the  right  to  do  the  same  thing  to  keep  up  profits.  Co-opera- 
tion among  railroads  —  that  is,  "pooling  "  —  is  brought  about  to  keep 
rates  fair  to  the  roads,  and  not  to  put  them  above  the  point  at  which 
industry  will  thrive.  That  the  roads  cannot  do  with  advantage  to 
themselves.  Railroads  "  pool"  occasionally,  but  they  oftener  agree  on 
rates,  or  promise  to  keep  them  up.  But  they  never  put  them  so  high 
that  business  cannot  be  carried  on  under  them  ;  never  make  them  above 
a  stimulating  figure  ;  never  make  them  to  prohibit  business.  There  is 
no  case  recorded  where  a  railroad  company  has  made  rates  so  high  as 
to  stop,  or  even  diminish,  business  of  a  legitimate  character.  To  do  so 
would  be  idiocy.  I  speak  of  the  rule  —  there  may  be  isolated  excep- 
tions to  it  —  but  no  railroad  owner  wants  to  make  rates  that  will 
depress  business.  Competition  acts  unequally  in  all  sorts  of  business 
and  all  avocations,  at  times,  but  neither  Mr.  Adams  nor  any  other 
advocate  of  the  paternal  plan  of  regulating  commerce  by  statutes,  pro- 
poses to  legislate  prices  for  commodities  or  services  because  those  prices 
and  services  do  not  at  all  times,  in  all  places  and  under  all  conditions, 
indicate  an  equal  pressure  of  competition.  The  people  ought  to  have 
steady  and  unvarying  rates  of  passenger  fare  and  freight  tariffs.  It 
would  be  a  good  thing  for  them,  just  as  gold  and  silver  are  good  things 
for  a  circulating  medium  and  a  measure  of  value  ;  it  would  render  fluc- 
tuations in  trade  less  imminent.  And  it  is  easier  and  safer  to  carry  on 
business  where  there  is  a  permanent  fixedness  to  the  purchasing  power 
of  money  and  the  rates  of  transportation.  If  railroads  pool  and 
give  rates  which  shall  be  remunerative  to  their  owners,^and  still  stimu- 
late shipments,  the  result  will  be  beneficent  to  all  the  people.  But  if 
rates  are  down  to-day  and  part  of  your  merchants  get  goods  into  your 
town  now,  and  rates  go  up  to-morrow  and  then  the  other  merchants  get 
in  their  goods,  the  consequence  is  disaster  to  the  latter  shippers,  is  it 
not.' 

Farmer.  Yes,  unless  they  can  make  a  combination  with  those  who 
shipped  in  on  the  low  rates  to  hold  the  prices  up  and  they  make  more 
money,  then  the  last  shippers  would  tiot  lose. 

R.  R.  Supt.  Precisely  so.  Sometimes  men  are  utterly  ruined  by  a 
change  of  rates  which  reduce  railroad  earnings    from  fair  returns  upon 

3 


34  A  Colloquy.     Railroads 

the  money  invested  to  absolutely  nothing;  and  sometimes  combination 
would  save  them.  Then,  if  combination  may  be  of  good  as  well  as  of 
evil  tendencies,  in  labor  co-operation,  in  merchandising,  and  in  rail- 
roading, why  should  government  and  its  politicians  be  importuned  to 
go  into  store-keeping,  or  manufacturing,  or  railroading,  to  prevent  it  ? 

Goz't.  Official.  Well,  you  say  steadiness  in  rates  is  desirable,  just  as 
steadiness  in  the  purchasing  power  of  money.  And  that  being  the  case, 
the  best  way  to  get  it  is  by  government  ownership  of  the  roads.  What 
do  you  say  to  that } 

R.  R.  Supt.  Steadiness  in  rail  rates  is  just  as  desirable  as  steadiness 
in  the  price  of  bread  and  potatoes,  or  the  wages  of  labor.  But  there 
are  fluctuations  in  all  these  things,  and,  with  our  paper  money  system, 
even  energetic  fluctuations  in  the  purchasing  power  of  denominational 
dollars.  The  price  of  wheat  fluctuates  on  the  Board  of  Trade  in  Chi- 
cago much  more  than  railroa(^  rates  fluctuate.  Pooling  tends  to  stop 
sudden  fluctuations  in  charges,  and  leaves  railroads  to  change  only  as 
their  interests  prompt  them  to  put  rates  up  or  put  rates  down,  and  never 
get  them  beyond  a  figure  which  will  stimulate  shipments.  And  though, 
at  present,  rail  rates  often  go  below  a  point  which  will  stimulate  trade, 
tJiey  never  go  above  tJuxt  point ! 

Govt.  Official.  But,  if  the  tendency  of  railroads  is,  as  you  admit,  to 
combination,  why  may  not  some  great  corporation  in  the  future  control 
all  the  great  through  lines,  and  then  put  rates  up  or  down  to  please 
itself — why  might  it  not,  for  example,  build  up  Chicago,  and  destroy 
the  trade  of  St.  Louis  .'*  And  what  can  prevent  it  becoming  a  mam- 
moth political  power  in  the  land  too  great  to  be  tolerated  .<* 

R.  R.  Supt.  Self-interest,  the  great  natural  law  of  trade,  will  pre- 
vent the  commercial  wrong  as  to  Chicago  and  St.  Louis.  And  the 
political  danger  is  as  much  a  phantom  as  the  commercial  one,  because 
railroads  will  never  so  combine  as  you  and  Mr.  Adams  seem  to  fear, 
any  more  than  any  other  great  industries  will  combine.  The  tendency 
to  combination  in  railroads  grows  out  of  a  necessity.  They  are  trying 
to  live  on  what  is  not  enough  to  support  them  all ;  hence  they  fight  and 
financially  die,  or  must  combine  to  financially  live.  But  as  business 
increases  the  tendency  to  combination  will  lessen.  There  will  still  be 
combinations,  or  consolidation  of  lines  mutually  dependent  on  each 
other,  like  the  Chicago,  Burlington  &  Quincy,  in  Illinois,  and  the  Bur- 
lington &  Missori  River  Railroad,  in  Iowa.  But  the  tendency  to  combi- 
nation between  rival  lines  will  lessen  as  the  volume  of  business  increases 
with  the  growth  of  population,  because  the  necessity  will  lessen.    At  the 


and  their  Relations  to  the  Public.  .  35 

worst,  it  is,  perhaps,  a  question  whether  the  railroads  could  become  as 
dangerous  as  a  political  power  in  private  hands,  as  they  unquestionably 
would  be  in  the  hands  of  politicians. 

Govt.  Official.  But  suppose  the  owners  or  managers  of  the  railroads 
did  not  think  it  for  their  interest  to  stimulate  St.  Louis  traffic,  and  did 
think  it  their  interest  to  kill  it :  we  all  know  that  the  laws  of  trade  are 
often  disregarded  by  railroad  managers  for  selfish  purposes,  and  in  dis- 
regard of  the  rights  of  the  owners  and  interests  of  the  stock  holder;  in 
such  cases,  where  is  your  remedy? 

R.  R.  Supt,  What  you  say  about  railroad  managers  sometimes 
violating  the  laws  of  trade  has  some  truth  in  it.  But  the  violation  is 
always,  in  effect,  at  the  expense,  ultimately  of  the  stockholders  and  to 
the  gain  of  the  public.  Managers  often  ruin  roads  and  their  owners  by 
making  transportation  of  men  and  things  too  cheap.  They  ?iever  ruin 
either  by  making  rates  too  high  J  If  the  right  to  build  railroads  is  free,  as 
it  should  be,  St. Louis  would,  in  the  case  you  suppose,  build  a  railroad  out- 
side the  combination,  but  sucl^  a  case  is  practically  impossible ;  admit, 
liowever,  for  the  sake  of  the  argument,  that  a  railroad  combination  could 
be  formed  to  kill  off  St.  Louis,  what  remedy  would  you  suggest }  And 
then  as  to  disregarding  the  laws  of  trade  and  the  interests  of  owners,  that 
will  remedy  itself;  those  laws  can  no  more  be  violated  with  impunity, 
than  can  the  laws  of  nature.  Every  infringement  furnishes  as  a  se- 
quence, its  own  penalty.  And  at  last,  owners,  men  who  have  put  money 
into  railroads,  are  more  vigilant  in  looking  after  their  interests  than  ever 
the  public  will  become.  Place  your  hand  on  a  hot  stove,  and  it  is 
burned ;  that  is  the  penalty  for  violating  a  natural  law.  Put  your  hand 
into  another  man's  pocket,  and  you  are  arrested  and  punished ;  that  is 
the  penalty  for  violating  the  statute  law.  Again  I  ask  you  where  is  the 
remedy  to  protect  St.  Louis,  in  your  suppositious  case,  or  to  take  care  of 
the  interests  of  owners,  when  managers  violate  the  laws  of  trade  ? 

Govt.  Official.     It  is  in  governmental  control  of  all  railroads. 

R.  R.  Sup't.  Suppose  the  government  for  the  time  being,  should  be 
—  as  it  very  possibly  may  be,  at  no  distant  day  —  in  the  hands  of  the 
people  of  the  Mississippi  Valley,  and  they  should  want  to  kill  off 
New  York,  and  build  up  St.  Louis,  as  the  great  commercial  centre  of 
the  country;  could  that  be  done.' 

Govt.  Official.     It  would  not  be. 

R.  R.  Supt.  It  would  be  more  probable  than  the  case  which  you 
suppose,  and  then  New  York  would  have  no  remedy.   It  could  not  build 


36  A  Coi/oguy.     Railroads  and  their  Relatiotts  to  the  Public. 

a  railroad  outside  the  combination,  because  railroads  instead  of  being 
free,  would  be  part  of  the  government.  You  can  certainly  depend  for 
the  correction  of  these  abuses  much  more  safely  upon  the  self-interest 
and  keen  vigilance  of  private  owners  of  railroads  than  on  politicians 
connected  with  the  government,  who  have  no  interest  in  the  railroads. 
The  paternal  plan  of  government  is  not  consistent  with  the  republican 
system.  In  a  country  where  there  is  no  entailment  of  property,  where 
all  laborers  may  become  capitalists,  and  in  the  vicissitudes  of  business 
all  capitalists  may  become  laboreis,  there  can  be  no  danger  of  railroads 
or  other  corporations  usurping  popular  rights  or  oppressing  the  people. 
Perfect  and  unrestricted  freedom,  which  will  permit  Labor  to  demand 
and  obtain  the  highest  possible  wages,  and  Capital  to  demand  and 
obtain  the  highest  possible  profits,  will  best  promote  the  permanent 
prosperity  of  all  the  people.  No  legislature,  no  congress,  ever  existed 
wise  enough  to  prescribe  the  number  of  hours  which  shall  constitute 
a  day's  work  for  the  laborer,  nor  the  wages  it  is  worth.  And  neither 
did  any  law-making  power  ever  know  enough  to  enact  statutory  profits 
for  Capital,  whether  in  railroads  or  out  of  railroads.  Let  both  Labor 
and  Capital  stand  upon  their  natural  rights.  Law-makers  can  render 
no  aid  in  adjusting  the  wages  of  the  »one  nor  the  profits  of  the  other 
without  violating  all  the  laws  of  political  economy.  All  attempts  at 
such  adjustments  have  been  barren  of  good,  and  fertile  in  evil  results. 


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